Budgeting 4c from sample aq2013

Hi first i want to say huge thanks to eveyone who helped me in my spreadsheets module.
I passed the assesement. And have now completed level 3. Im actually im middle of budgeting and have come across a question which puzzles me.

Prepare forcast from operating budget and statement of financial position assumptions.

Comments

Is this for a cash budget ? If payables are reducing this would mean you are paying out more in cash to reduce the closing payables, similar to if receivables are increasing you are collecting less cash.

Hi first i want to say huge thanks to eveyone who helped me in my spreadsheets module.
I passed the assesement. And have now completed level 3. Im actually im middle of budgeting and have come across a question which puzzles me.

Prepare forcast from operating budget and statement of financial position assumptions.

It seems im doing the oposite to the answer. If materials payables reduce by 3500 i have 30700. But answer is 37700

Thanks zaf

You are completely the opposite.
Just think about cash:
If you owed someone £5000 at the start of September and reduced this to £1,500 by the end of September you would have had to have paid that person.
So look at your materials payable: You've reduced what you owe by £3,500 (in other words paid that amount) AND you've bought £34,200 worth of materials - so you've paid £37,700.

Tha same applies to the other balances. Does that make sense?

Look from the point of view of cash - if you need to then look back at your level 3 Cash Management notes.